How Elon Musk Plans to Pay $44 Billion to Acquire Twitter

Elon Musk purchased himself a while on Thursday, after a decide accepted the billionaire’s request to halt a Twitter lawsuit to permit him to shut his proposed $44 billion ((roughly Rs. 3,62,500 crore) buyout of the social media firm by October 28.

Now comes the large query: how will he pay for it?

Musk stated earlier this week he would purchase Twitter for $54.20 (roughly Rs. 4,320) per share, the value that was agreed in April, however included a situation that the closing of the deal be contingent on debt financing for the transaction coming by.

What is his financing plan?

Musk has pledged to supply $46.5 billion (roughly Rs. 3,83,100 crore) in fairness and debt financing for the acquisition, which covers the $44 billion price ticket and shutting prices. Banks, together with Morgan Stanley and Bank of America, dedicated to supply $13 billion (roughly Rs. 1,07,106 crore) of debt financing to help the deal.

Twitter on Thursday cited one of many banks as saying that Musk had not communicated to them that he intends to shut the transaction. Musk stated that banks had been “working cooperatively to fund the close” on or round October 28.

Musk’s $33.5 billion (roughly Rs. 2,76,000 crore) fairness dedication would come with his 9.6 p.c Twitter stake, which is value $4 billion (roughly Rs. 33,000 crore), and the $7.1 billion (roughly Rs. 58,500 crore) he secured from fairness buyers, together with Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.

That leaves Musk needing to safe a further $22.4 billion (roughly Rs. 1,84,500 crore) of funds to cowl the fairness financing portion of the deal.

How a lot does he have?

Musk, 51, is the world’s richest individual with a internet value of $219 billion (roughly Rs. 18,00,000 crore) in accordance with Forbes, however a big portion of his fortune is tied to his stakes in Tesla and Space X.

According to a Reuters calculation, Musk has about $20 billion (roughly Rs. 1,65,000 crore) of money after promoting down a part of his Tesla stake by a number of transactions in November and December final 12 months and April and August this 12 months. This means he would want to lift a further $2 billion (roughly Rs. 16,500 crore) to $3 billion (roughly Rs. 24,250 crore), even when the opposite fairness and debt commitments are honored.

How can he fill the fairness shortfall?

He can both select to promote down extra of his stake in Tesla, or his stake in SpaceX. Other choices embody acquiring a mortgage from banks towards the shares, or getting extra buyers to contribute fairness.

In August, Musk stated he doesn’t plan to promote down his stake in Tesla any additional, however the newest U-turn from Musk has revived considerations over whether or not he’ll promote extra of the electric-vehicle maker’s inventory to fund the deal.

Musk owned 465 million Tesla shares value $111 billion (roughly Rs. 9,15,000 crore) following its 3-for-1 inventory cut up, in accordance with Reuters’ calculation. He has already borrowed closely towards a giant portion of his Tesla stake.

Does he have sufficient fairness buyers?

On April 20, Oracle founder Larry Ellison stated he was fascinated by taking part within the deal as one of many buyers in Twitter.

Ellison is amongst a bunch of buyers who’ve collectively promised to chip in $7.1 billion of financing for the deal. So far, no buyers have publicly stated they’d again away from their commitments.

© Thomson Reuters 2022